M&G (Lux) Floating Rate High Yield Solution

Objective and investment policy

Objective

The fund aims to provide a competitive global high yield bond market exposure whilst limiting interest rate risk. Fund performance is measured against a global high yield composite index over any five-year period.

The composite index is 2/3 the Markit CDX North American High Yield 5Y Excess Return Index and 1/3 of the Markit iTraxx Europe Crossover 5Y Excess Return Index and Overnight LIBOR.

Investment policy and strategy

Core investment: At least 70% of the fund is invested in floating rate high yield bonds. The exposure to floating rate high yield bonds is typically gained indirectly via derivatives (high yield credit default swaps) combined with government floating rate bonds from anywhere in the world, or cash.

Between 70% and 130% of the fund is exposed to the high yield bond market, by investing directly or indirectly via derivatives. The fund’s neutral geographical asset allocation is 2/3 North America and 1/3 Europe.

The fund typically invests in assets denominated in US dollar or in other currencies hedged back to US dollar.

Other investments: The fund may invest in other debt securities (including government bonds), other funds and cash or assets that can be turned quickly into cash.

Derivatives: The fund invests via derivatives and may also use derivatives to reduce the risks and costs of managing the fund.

Strategy in brief: The fund is globally diversified and seeks to provide exposure to a broad range of high yield bond issuers across different sectors.

The investment manager has the flexibility to adjust the fund’s credit exposure and regional allocation based on an assessment of current market valuations and the macroeconomic environment, including the likely path of economic growth, inflation and interest rates.

Benchmark: A composite index made up of the following indices is a point of reference against which the performance of the fund may be measured:

• 2/3 Markit CDX North American High Yield 5Y Excess Return Index

• 1/3 Markit iTraxx Europe Crossover 5Y Excess Return Index and Overnight LIBOR

The benchmark is a comparator against which the fund’s performance can be measured. The composite index has been chosen as the fund’s benchmark as it best reflects the scope of the fund’s investment policy. The benchmark is used solely to measure the fund’s performance and does not constrain the fund's portfolio construction.

The fund is actively managed.The investment manager has complete freedom in choosing which investments to buy, hold and sell in the fund. The fund’s holdings may deviate significantly from the benchmark’s constituents.

For unhedged and currency hedged share classes, the benchmark is shown in the share class currency.

You can find more information about the objective and investment policy of the fund in the Prospectus.

Risks associated with the fund

The value and income from the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise. There is no guarantee that the fund will achieve its objective and you may get back less than you originally invested.

High yield bonds usually carry greater risk that the bond issuers may not be able to pay interest or return the capital.

The fund may use derivatives to profit from an expected rise or fall in the value of an asset. Should the asset’s value vary in an unexpected way, the fund will incur a loss. The fund’s use of derivatives may be extensive and exceed the value of its assets (leverage). This has the effect of magnifying the size of losses and gains, resulting in greater fluctuations in the value of the fund.

Investments in bonds are affected by interest rates, inflation and credit ratings. It is possible that bond issuers will not pay interest or return the capital. All of these events can reduce the value of bonds held by the fund.

The fund is exposed to different currencies. Derivatives are used to minimise, but may not always eliminate, the impact of movements in currency exchange rates.

In exceptional circumstances where assets cannot be fairly valued, or have to be sold at a large discount to raise cash, we may temporarily suspend the fund in the best interest of all investors.

The fund could lose money if a counterparty with which it does business becomes unwilling or unable to repay money owed to the fund.

Operational risks arising from errors in transactions, valuation, accounting, and financial reporting, among other things, may also affect the value of your investments.

Further details of the risks that apply to the fund can be found in the fund's Prospectus.

Other information

The Fund allows for the extensive use of derivatives


The performance webpage for this fund is currently being reconfigured. In the interim, for performance information, please refer to the latest Fund Factsheet which can be found in the Literature section.

Fund Team

James Tomlins

James Tomlins - Fund manager

James Tomlins, who has more than a decade of experience in high yield credit, joined M&G in June 2011 and started managing fixed income portfolios in January 2014. The strategies he manages include the Global High Yield Bond, the Global Floating Rate High Yield and the Global High Yield ESG Bond strategies. James was previously an analyst and then a fund manager at Cazenove Capital Management. Before Cazenove, he was at KBC Alternative Investment Management; in the three years prior to that, he worked at Merrill Lynch Investment Managers. James is a CFA charterholder. He graduated with an MA in history and PgDip in economics from the University of Cambridge.

 Team member biography
Stefan Isaacs

Stefan Isaacs - Fund manager

Stefan Isaacs is deputy head of M&G's Wholesale Fixed Income team and is fund manager of the M&G (Lux) European Corporate Bond Fund. He is also co-fund manager of the M&G (Lux) Global High Yield Bond Fund, M&G (Lux) Floating Rate High Yield Solution, M&G (Lux) Global High Yield ESG Bond Fund and M&G (Lux) Global High Yield Bond 2023 Fund, and deputy fund manager of the M&G (Lux) Optimal Income Fund. Stefan initially joined M&G as a graduate in 2001 and was subsequently promoted to corporate bond dealer specialising in high yield bonds and euro-denominated credit, becoming part of the fund management team in 2006.

 Team member biography

Ratings

Rating is at a share class level

1 Star Rating

For Investment Professionals only. Not for onward distribution to any other type of client. No other persons should rely on the information contained on this website. Content should therefore be shared responsibly with other investment professionals. The value of investments will fluctuate, which will cause fund prices to fall as well as rise and you may not get back the original amount you invested.